What changed in this filing

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Item 1. Financial Statements

2024-04-29 compared with 2023-10-26 · 53 added, 110 removed, 261 unchanged (38% of the section changed)

3 unchanged sentences

(In thousands, except per share data)

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

Three Months Ended

Net sales $ 1,120,810 $ 1,206,774

19 unchanged sentences

(In thousands)

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

Three Months Ended

Net income $ 78,885 $ 101,699

1 unchanged sentence

Foreign currency translation (loss) gain ( 3,668 ) 2,469

Unrealized gains on interest rate swaps, net of the change in taxes of $( 305 ), $( 2,925 ), $( 202 ), and $( 8,422 )

Unrealized gain (loss) on interest rate swaps, net of the change in taxes of $( 742 ) and $ 1,269

2,226 ( 3,809 )

Total other comprehensive (loss) income ( 4,109 ) ( 2,376 ) 849 6,776

Total other comprehensive loss ( 1,442 ) ( 1,340 )

Comprehensive income $ 77,443 $ 100,359

3 unchanged sentences

(In thousands, except share data)

September 30, September 30, December 31,

March 31, March 31, December 31,

2024 2023 2023

30 unchanged sentences

38,462,331 , 39,032,631 and 38,354,829 shares issued and

outstanding at September 30, 2023, September 30, 2022 and

outstanding at March 31, 2024, March 31, 2023 and

December 31, 2023, respectively

1 unchanged sentence

Retained earnings 720,228 665,561 699,990

Accumulated other comprehensive income (loss) 6,744 ( 708 ) 5,895

Accumulated other comprehensive income 5,140 4,555 6,582

Total stockholders’ equity 1,345,684 1,256,750 1,312,787

4 unchanged sentences

(In thousands)

Nine Months Ended

September 30,

Three Months Ended

Operating activities

5 unchanged sentences

Equity in earnings of unconsolidated investments, net ( 57 ) ( 36 )

Goodwill impairment 550 —

Other ( 853 ) 2,732

14 unchanged sentences

Payments on revolving line of credit ( 365,500 ) ( 376,895 )

Proceeds from term loan under credit facility — 250,000

Payments on term loan under credit facility ( 6,250 ) —

4 unchanged sentences

Payments on short-term borrowings and current portion of long-term debt ( 1,561 ) ( 1,223 )

Payments of deferred financing costs ( 52 ) —

Payments of deferred and contingent acquisition consideration — ( 551 )

30 unchanged sentences

Balance at March 31, 2024 38,462 $ 38 $ 620,278 $ 720,228 $ 5,140 $ 1,345,684

— — — 232,250 — 232,250

Foreign currency translation

— — — — 2,801 2,801

Interest rate swaps, net of the change in taxes of $( 1,166 )

— — — — 3,497 3,497

Repurchases of common stock, net of retirements

Share-based compensation

— — 5,073 — — 5,073

Issuance of stock under share-based compensation plans

16 — 1,413 — — 1,413

Declaration of cash dividends

— — — ( 42,945 ) — ( 42,945 )

Other — — — ( 307 ) — ( 307 )

Balance at June 30, 2023 39,049 $ 39 $ 593,081 $ 854,559 $ 10,853 $ 1,458,532

— — — 137,843 — 137,843

Foreign currency translation

— — — — ( 5,025 ) ( 5,025 )

Interest rate swaps, net of the change in taxes of $( 305 )

— — — — 916 916

Repurchases of common stock, net of retirements

( 385 ) — — ( 138,003 ) — ( 138,003 )

Share-based compensation

— — 4,596 — — 4,596

Issuance of stock under share-based compensation plans

13 — 2,332 — — 2,332

Declaration of cash dividends

— — — ( 42,965 ) — ( 42,965 )

Balance at September 30, 2023 38,677 $ 39 $ 600,009 $ 811,434 $ 6,744 $ 1,418,226

Common Stock Additional

1 unchanged sentence

Comprehensive

Shares Amount Capital Earnings (Loss) Income Total

Shares Amount Capital Earnings Income Total

Balance at December 31, 2022 39,069 $ 39 $ 575,776 $ 653,484 $ 5,895 $ 1,235,194

13 unchanged sentences

Balance at March 31, 2023 39,033 $ 39 $ 586,595 $ 665,561 $ 4,555 $ 1,256,750

— — — 307,283 — 307,283

Foreign currency translation

— — — — ( 7,125 ) ( 7,125 )

Interest rate swaps, net of the change in taxes of $( 1,631 )

— — — — 4,893 4,893

Repurchases of common stock, net of retirements

( 547 ) — — ( 216,261 ) — ( 216,261 )

Share-based compensation

— — 3,914 — — 3,914

Issuance of stock under share-based compensation plans

25 — 1,972 — — 1,972

Declaration of cash dividends

— — — ( 39,896 ) — ( 39,896 )

Balance at June 30, 2022 39,588 $ 40 $ 564,641 $ 662,709 $ 1,668 $ 1,229,058

— — — 190,055 — 190,055

Foreign currency translation

— — — — ( 11,152 ) ( 11,152 )

Interest rate swaps, net of the change in taxes of $( 2,925 )

— — — — 8,776 8,776

Repurchases of common stock, net of retirements

( 549 ) ( 1 ) — ( 192,528 ) — ( 192,529 )

Share-based compensation

— — 4,120 — — 4,120

Issuance of stock under share-based compensation plans

15 — 2,094 — — 2,094

Declaration of cash dividends

— — — ( 39,544 ) — ( 39,544 )

Balance at September 30, 2022 39,054 $ 39 $ 570,855 $ 620,692 $ ( 708 ) $ 1,190,878

The accompanying Notes are an integral part of the Consolidated Financial Statements.

2 unchanged sentences

Note 1 – Summary of Significant Accounting Policies

Pool Corporation (the Company , which may be referred to as we, us or our ) prepared the unaudited interim Consolidated Financial Statements following U.S.

Pool Corporation (the Company , which may also be referred to as we, us or our ) prepared the unaudited interim Consolidated Financial Statements following U.S.

generally accepted accounting principles (GAAP) and the requirements of the Securities and Exchange Commission (SEC) for interim financial information.

4 unchanged sentences

You should read the interim Consolidated Financial Statements in conjunction with the Consolidated Financial Statements and accompanying notes in our 2023 Annual Report on Form 10-K.

The results for our three and nine-month periods ended September 30, 2023, are not necessarily indicative of the expected results for our fiscal year ending December 31, 2023.

Newly Adopted Accounting Pronouncements

In conjunction with our debt amendments discussed further in Note 5, we adopted Accounting Standards Update (ASU) 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and all related amendments, which are codified into Accounting Standards Codification (ASC) 848 as of June 30, 2023 .

This standard provides optional expedients and exceptions for applying GAAP to transactions affected by reference rate reform if certain criteria are met.

These transactions include contract modifications, hedging relationships and sale or transfer of debt securities classified as held-to-maturity.

The adoption of this standard did not have a material impact on our consolidated financial statements or related disclosures, and we do not expect a material impact in future periods .

The results for our three-month period ended March 31, 2024, are not necessarily indicative of the expected results for our fiscal year ending December 31, 2024.

We reduce federal and state income taxes payable by the tax benefits associated with the exercise of nonqualified stock options and the lapse of restrictions on restricted stock awards.

1 unchanged sentence

We record all excess tax benefits as a component of income tax benefit or expense on the Consolidated Statements of Income in the period in which stock options are exercised or restrictions on restricted stock awards lapse.

We recorded excess tax benefits of $ 0.4 million in the third quarter of 2023 compared to $ 0.6 million in the third quarter of 2022 and $ 5.9 million in the nine months ended September 30, 2023, compared to $ 9.5 million in the nine months ended September 30, 2022.

We recorded excess tax benefits of $ 7.4 million in the first quarter of 2024 compared to $ 4.8 million in the first quarter of 2023.

Retained Earnings

We account for the retirement of treasury shares as a reduction of Retained earnings.

As of September 30, 2023, the Retained earnings on our Consolidated Balance Sheets reflects cumulative net income, the cumulative impact of adjustments for changes in accounting pronouncements, treasury share retirements since the inception of our share repurchase programs of $ 2.3 billion and cumulative dividends of $ 1.1 billion.

Accumulated Other Comprehensive Income (Loss)

The table below presents the components of our Accumulated other comprehensive income (loss) balance (in thousands):

September 30, December 31,

We account for the retirement of repurchased shares as a reduction of Retained earnings.

As of March 31, 2024, the Retained earnings on our Consolidated Balance Sheets reflects cumulative net income, the cumulative impact of adjustments for changes in accounting pronouncements, share retirements since the inception of our share repurchase programs of $ 2.5 billion and cumulative dividends of $ 1.2 billion .

Accumulated Other Comprehensive Income

The table below presents the components of our Accumulated other comprehensive income balance (in thousands):

March 31, December 31,

2024 2023 2023

2 unchanged sentences

21,507 21,694 19,281

Accumulated other comprehensive income (loss) $ 6,744 $ ( 708 ) $ 5,895

Accumulated other comprehensive income $ 5,140 $ 4,555 $ 6,582

Recent Accounting Pronouncements Pending Adoption

The following table summarizes recent accounting pronouncements that we plan to adopt in future periods:

Standard Description Effective Date Effect on Financial Statements and Other Significant Matters

Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures

In December 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-09, Income Taxes- Improvements to Income Tax Disclosures , which will require enhancements and further transparency to various income tax disclosures, most notably the tax rate reconciliation and income taxes paid.

Annual periods beginning after December 15, 2024 on a prospective basis.

Retrospective application for all periods presented is permitted.

Early adoption is also permitted.

We are currently evaluating the effect this standard will have on our disclosures.

ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures, which intends to improve reportable segment disclosures by requiring enhanced disclosures about significant segment expenses, enhance interim disclosure requirements, refine situations in which an entity can disclose multiple segment measures of profit or loss and provide advanced segment disclosure requirements for entities with a single reportable segment, as well as other disclosure requirements.

Annual periods beginning after December 15, 2023 on a retrospective basis for all periods presented.

Early adoption is permitted.

We are currently evaluating the effect this standard will have on our disclosures.

ASU 2023-06, Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements - Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative , which will impact various disclosure areas, including the statement of cash flows, accounting changes and error corrections, earnings per share, debt, equity, derivatives and transfers of financial assets.

The amendments in ASU 2023-06 will be effective on the date the related disclosures are removed from Regulation S-X or Regulation S-K by the SEC and will no longer be effective if the SEC has not removed the applicable disclosure requirement by June 30, 2027.

Early adoption is prohibited.

We are currently evaluating the effect this standard will have on our disclosures.

Note 2 – Earnings Per Share

2 unchanged sentences

Our participating securities include share-based payment awards that contain a non-forfeitable right to receive dividends and are considered to participate in undistributed earnings with common shareholders.

Participating securities excluded from weighted average common shares outstanding were 205,000 for the three months ended September 30, 2023 and 213,000 for the three months ended September 30, 2022, and 207,000 for the nine months ended September 30, 2023 and 223,000 for the nine months ended September 30, 2022.

Participating securities excluded from weighted average common shares outstanding were 205,000 for the three months ended March 31, 2024 and 213,000 for the three months ended March 31, 2023.

The table below presents the computation of earnings per share, including the reconciliation of basic and diluted weighted average shares outstanding (in thousands, except per share data):

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

Three Months Ended

Net income $ 78,885 $ 101,699

12 unchanged sentences

Note 3 – Acquisitions

In January 2024, we acquired the distribution assets of Shoreline Pool Distribution, a wholesale distributor of swimming pool products and supplies, adding one location in Mississippi.

In December 2023, we acquired the distribution assets of A.C.

Solucoes para Piscinas, Lda., a wholesale distributor of swimming pool equipment, chemicals and supplies, adding one location in Braga, Portugal.

In June 2023, we acquired the distribution assets of Pioneer Pool Products, Inc., a wholesale distributor of swimming pool equipment, chemicals and supplies, adding one location in Alabama.

1 unchanged sentence

In March 2023, we acquired the distribution assets of Pro-Water Irrigation & Landscape Supply, Inc., a wholesale distributor of irrigation and landscape supply products, adding two locations in Arizona.

In April 2022, we acquired the distribution assets of Tri-State Pool Distributors, a wholesale distributor of swimming pool equipment, chemicals and supplies, adding one location in West Virginia.

We have completed our acquisition accounting for these acquisitions, subject to adjustments for standard holdback provisions per the terms of the purchase agreements, which are not material.

1 unchanged sentence

Recurring Fair Value Measurements

Our assets and liabilities that are measured at fair value on a recurring basis include the unrealized gains or losses on our interest rate swap contracts, our deferred compensation plan asset and liability and contingent consideration related to recent acquisitions.

Our assets and liabilities that are measured at fair value on a recurring basis include the unrealized gains or losses on our interest rate swap contracts and our deferred compensation plan asset and liability.

The three levels of the fair value hierarchy under the accounting guidance are described below:

7 unchanged sentences

The table below presents our assets and liabilities measured and recorded at fair value on a recurring basis (in thousands):

Fair Value at September 30,

Fair Value at March 31,

Input Level Classification 2024 2023

Unrealized gains on interest rate swaps Level 2 Prepaid expenses and other current assets $ 4,984 $ —

Unrealized gains on interest rate swaps Level 2 Other assets 23,738 28,970

Deferred compensation plan asset Level 1 Other assets 17,025 14,014

Contingent consideration liabilities Level 3 Accrued expenses and other current liabilities $ — $ 546

Deferred compensation plan liability Level 1 Other long-term liabilities $ 17,025 $ 14,014

Interest Rate Swaps

We utilize interest rate swap contracts and forward-starting interest rate swap contracts to reduce our exposure to fluctuations in variable interest rates for future interest payments on our variable rate borrowings.

We use significant other observable market data or assumptions (Level 2 inputs) in determining the fair value of our interest rate swap contracts and forward-starting interest rate swap contract that we believe market participants would use in pricing similar assets or liabilities, including assumptions about counterparty risk.

11 unchanged sentences

Interest rate swap 2 March 9, 2020 September 29, 2022 February 26, 2027 $ 150.0 0.6690 %

For the interest rate swap contracts in effect at September 30, 2023, a portion of the change in the estimated fair value between periods relates to future interest expense.

For the interest rate swap contracts in effect at March 31, 2024, a portion of the change in the estimated fair value between periods relates to future interest expense.

Recognition of the change in fair value between periods attributable to accrued interest is reclassified from Accumulated other comprehensive income on the Consolidated Balance Sheets to Interest and other non-operating expenses, net on the Consolidated Statements of Income.

These amounts were not material in the three and nine-month periods ended September 30, 2023 or September 30, 2022.

These amounts were not material in the three-month periods ended March 31, 2024 or March 31, 2023.

We also have in place a forward-starting interest rate swap contract to extend the hedged period for future interest payments on a portion of our variable rate borrowings.

6 unchanged sentences

Additionally, failure of our swap counterparties would not eliminate our obligation to continue to make payments under our existing swap agreements if we were in a net pay position.

We amended the floating rate option for our interest rate swap contracts and forward-starting interest rate swap contract, effective June 30, 2023, to reflect the change in the reference rate in our debt agreements from the one-month London Interbank Offered Rate Market Index Rate (LIBOR) to the one-month Term Secured Overnight Financing Rate Index Rate (Term SOFR).

As permitted by ASC 848, a change in rate only does not qualify as a hedge modification, and we have accounted for and presented our interest rate swap contracts and forward-starting interest rate swap contract in the same manner as prior to the amendments.

Our interest rate swap contracts and forward-starting interest rate swap contract are subject to master netting arrangements.

2 unchanged sentences

We record an equal and offsetting deferred compensation plan liability, which represents our obligation to participating employees.

Changes in the fair value of the plan asset and liability are reflected in Selling and administrative expenses in the Consolidated Statements of Income.

Changes in the fair value of the plan asset and liability are reflected in Selling and administrative expenses on the Consolidated Statements of Income.

The carrying values of cash and cash equivalents, receivables, accounts payable and accrued liabilities approximate fair value due to the short maturity of those instruments.

3 unchanged sentences

The table below presents the components of our debt (in thousands):

September 30,

Variable rate debt

Short-term borrowings $ — $ 3,011

Current portion of long-term debt:

10 unchanged sentences

Total debt $ 979,177 $ 1,365,750

On June 30, 2023, we entered into the Second Amendment to the Second Amended and Restated Credit Agreement (the Credit Facility Amendment) among us as U.S.

Borrower, SCP Distributors Canada Inc.

as Canadian Borrower, SCP International, Inc.

as Euro Borrower, the Subsidiary Guarantors party thereto, Wells Fargo Bank, National Association, as Administrative Agent, and certain other lenders party thereto.

The Credit Facility Amendment updated the index used for the Base Rate (as further defined within the Credit Facility Amendment) from LIBOR to Term SOFR.

The Credit Facility Amendment also increased the maximum amount for the Accounts Securitization (as further defined within the Credit Facility Amendment) from $ 350.0 million to $ 500.0 million and increased the Canadian Dollar Commitment, Euro Commitment and Swingline Commitment (all as further defined within the Credit Facility Amendment) to $ 50.0 million each.

We also entered into the Second Amendment to Credit Agreement (the Term Facility Amendment) on June 30, 2023, among us, as Borrower, the Guarantors party thereto and Bank of America, N.A.

The Term Facility Amendment updated the index used for the Base Rate (as further defined within the Term Facility Amendment) from LIBOR to Term SOFR.

Our accounts receivable securitization facility (the Receivables Facility) provides for the sale of certain of our receivables to a wholly-owned subsidiary (the Securitization Subsidiary).

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements